New year stock - Jubilant FoodWorks

Buy - JUBLFOOD

CMP (NSE) 15:58, 20 May

487.55 5.851.21%

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Sector

FMCG

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Reco. Price

3,525

Period

12-Months

Target Price

4,400

upside

%

Stop Loss

0

Last updated on

31 Dec, 2021

Jubilant FoodWorks is the largest player in the organised pizza market, with 60%+ market share. It is the exclusive franchisee for Domino’s Pizza for the India, Sri Lanka, Bangladesh and Nepal geographies (valid until 2024). The company has 1,100+ stores (largely company owned and in Tier I cities) spread across 260+ cities in India. Jubilant also owns the franchise to operate Dunkin’ Donuts’ stores in India. Currently, it has 37 Dunkin’ stores and is focusing on improving profitability in this format.

Investment Rationale
Growth was led by the convenience channel
: Jubilant FoodWorks reported results above our estimates with 37% sales growth. SSS growth at 26% on a low base, with sales per store up 26% YoY, the delivery and takeaway channels grew 36.8% and 72.2%, respectively, over pre-Covid levels. However, dine-in was still sluggish and has recovered to 46.9% of 2QFY20. Operational stores were almost at 95%, with a noticeable uptick in demand compensating for the lost operational hours from stores that were closed. An encouraging recovery was seen in order counts, now close to pre-Covid at the system level. Management states that dine-in normalisation will help in this recovery and growth, going forward. While ticket sizes saw a reduction as dine-in opened up, it is still higher than pre-Covid due to increased delivery charges and higher mix of delivery. Company expects the delivery share to remain higher vs pre-Covid levels, leading to higher ticket sizes on a sustainable basis.

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